Company Background

The Company was incorporated in Malaysia on 2 May 2023 under the Act as a private company limited by shares under HE Group Sdn Bhd. It was subsequently converted into a public company on 23 May 2023.

The company's principal activity is investment holding. Through its subsidiary, the company is involved in the provision of power distribution systems, other building systems, and works, hook-up and retrofitting of electrical equipment and trading.

Use of proceeds

1. Business expansion: - 15.00% (within 30 months)
2. Capital expenditure - 7.19% (within 24 months)
3. Working capital - 62.19% (within 36 months)
4. Estimated listing expenses - 15.62% (within 1 month)

Business expansion: - 15.00% (within 30 months)

The company intends to allocate RM3.65 million, representing 15.00% of the gross proceeds from its Public Issue for the hiring of additional engineers and other personnel, purchase and upgrade of equipment and software including computer-related devices such as desktops and laptops, and BIM software for project management, setting up of new offices, as well as marketing, advertising and business development expenses.

The breakdown of the business expansion costs is as follows:

By hiring a team of engineers with experience in designing and engineering the mechanical and process utility systems, the company can bid as an integrated MEP engineering service provider for large industrial and commercial projects. The company also aims to raise market awareness of its Group and its capabilities through marketing activities which may allow them to capture potential business opportunities. Further, the company will be able to improve the effectiveness of its sales and marketing activities by setting up physical offices in Kulim and Johor.

Capital expenditure - 7.19% (within 24 months)

The company intends to allocate approximately RM1.75 million, representing 7.19% of the gross proceeds from the Public Issue, to purchase trucks for the delivery of materials and goods to project sites, and construction equipment such as boom lifts, scissor lifts and forklifts for the installation of electrical equipment.

The breakdown of the said purchases is as follows:

Working capital - 62.19% (within 36 months)

A total of RM15.13 million representing 62.19% of the gross proceeds from the Public Issue, has been earmarked to supplement the working capital requirements of the Group. The Group’s working capital requirements are expected to increase with the expected growth in the business. The breakdown of this is as follows:

Business model

The business model is depicted in the following diagram:

The company is an electrical engineering service provider focusing on the provision of power distribution systems for end-user premises such as industrial plants, and industrial and commercial substations. The company is involved in the design, supply, installation, testing and commissioning of HV, MV, LV and ELV power distribution systems.

They also provide other building systems and works including mechanical systems, control and instrumentation systems, as well as civil, structural and architectural works, which the company outsourced to third parties under its supervision and project management. The company also carries out electrical equipment hook-up and retrofitting which includes the installation of machinery and equipment, and providing upgrades and modifications of electrical equipment to complement the power distribution system works. The company are also involved in trading of electrical products

Click here to continue the IPO - HE Group Berhad (Part 2)

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